Amadeus Energy (ASX: AMU) has reached a binding agreement to merge with UK-based Ecofin Energy, the holding company for Lonestar Resources, which owns a portfolio of Eagle Ford Shale assets in Texas.
The combined company, which will take up Lonestar’s name, will hold proved (1P) reserves of 12.7 million barrels of oil equivalent (MMboe) and proved and probable (2P) reserves of 18.4MMboe, 65% of which consists of high value oil, condensate and natural gas liquids.
This has an estimated NPV at a 10% discount for 1P reserves of US$229 million.
Amadeus had in early September estimated its proved reserves at 4.6 million barrels of oil equivalent.
The new Lonestar will also have combined production of 2,887 barrels of oil equivalent per day (boepd) for the 3 months ended 30 September 2012, expected to increase to between 3,300 and 3,800 boepd in the year ending 31 December 2013.
It will also engage Lonestar’s proven and experienced management team.
Transaction
Amadeus will issue 460 million new ordinary shares to the current owners of Ecofin at completion of the deal. These are subject to a six month voluntary escrow period.
A further 40 million shares will be issued to the current owners of EER within 18 months of completion upon the satisfaction of either securing an externally audited 2P reserve of Lonestar’s Gonzo asset with a PV10 of at least US$40 million or the company’s share price trading at a volume weighted average price of A$0.40 or more during a period of 45 consecutive trading days following completion.
Assuming the issue of all 500 million shares to the current owners of EER, Amadeus’ existing shareholders will own 32% of the Company, with the remaining 68% to be owned by EER security holders.
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